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Gold/Mining/Energy : Precious and Base Metal Investing -- Ignore unavailable to you. Want to Upgrade?

To: Elizabeth Andrews who wrote (11342)	5/22/2003 7:59:19 AM
From: russwinter	Read Replies (2) \| Respond to of 39344

<based on the mix of policy objectives> I agree that what you have described is the policy objective. The wild card is the market, or more precisely the bond market vigilantes themselves. So much of the game has been predicated on lower interest rates still, and thus further bond portfolio price gains. Should this trend reverse (resulting in portfolio losses from higher interest rates) even modestly, it would be like a giant snow and ice avalanche coming off a mountain. There would be no way for the Fed to defend against massive capital flight and bond portfolio liquidation without capital controls (would be an extreme measure), or higher interest rates (more likely)to try and keep capital at home. During some of the Latin American and Asian capital flight crises, those countries interest rates went up fivefold. I'm warming up to the notion that the best trade of the rest of 03, may be short notes, bonds, Eurodollars, and the slew of companies that benefit from extremely loose monetary policy.